Our industry sometimes gets a bad rap for being overly traditional and slow to change. But there’s no question we’ve seen some major shifts in employee benefits over the past 45 years. Three of those shifts will have implications for employers going forward.
Greater onus on the individual to save for retirement
Over the years, we’ve seen a significant decline in defined benefit pension plans and a rise in defined contribution plans, especially in the private sector. We’ve also seen an overall decline in workplace pension coverage. Combined, these factors put more pressure on the individual to plan, save and invest for retirement — which is a real challenge, given the state of financial literacy among Canadians today.
In fact, research by the International Foundation of Employee Benefit Plans found only about a third (34 per cent) of Canadian respondents felt very or somewhat positive about their financial literacy/knowledge. And a 2022 study by the Healthcare of Ontario Pension Plan found more than half (55 per cent) of respondents said they’re concerned about having enough money in retirement.
Recognizing the important connection between financial and mental well-being, the dialogue has been shifting — and will continue to shift — from financial literacy to wellness. Given the ongoing trend of declining workplace pension coverage, the industry hopes the future will bring a broader range of decumulation solutions that allow individuals to turn their savings into a reliable and predictable income stream that will last them through retirement.
Rise of technology to support benefits administration, delivery
We’ve seen technology expand in leaps and bounds — and the pandemic certainly accelerated that growth. From digital communications to reach a diverse workforce, to artificial intelligence to combat benefits fraud, to chatbots to streamline the user experience, technology has transformed how benefits are managed, administered, delivered and communicated to plan members.
As of April 2022, 63 per cent (or five billion people) of the global population were internet users, according to Statista. As the pace of technology accelerates, its applications in our industry will also increase. For example, virtual care came to the forefront during the coronavirus pandemic and has the potential to play a key role in Canadian health care in the future, particularly as this sector continues to grapple with post-pandemic burnout and a general labour shortage.
Increased personalization, customization of benefits
Today’s labour market is an employee market. The mantra of ‘what’s in it for me?’ is driving employers to rethink their benefits programs to accommodate a desire for flexibility and customization at the individual level. What’s more, the growing emphasis on diversity, equity and inclusion in the benefits space means many are reviewing and revamping their benefits programs and related communications to ensure they’re inclusive and truly meeting the needs of all members.
Looking ahead, benefits flexibility and inclusivity will remain important. We’ll likely see more customization and continued expansion of employee benefits beyond pure insurance into areas like child or elder care, tuition support and other non-traditional benefits that support employees’ work-life balance and overall well-being. This may also mean supporting a wider range of benefits across different specialized providers.
While it’s a lot for plan sponsors to manage, the advantage is increased awareness and appreciation. A recent survey by RBC Insurance Inc. found 69 per cent of Canadians aged 35 to 44 and 73 per cent of Canadians aged 18 to 34 said they’re likely to leave their current employer for another that offers better benefits. Of course, since benefits can be a powerful lever for attracting and retaining talent, effectively communicating the value of those benefits will be critical.
Without a crystal ball, it’s hard to know just what the industry will look like 45 years from now. But if the future is anything like the present, employees will still be at the centre — and that’s the most pivotal shift of all.
Alyssa Hodder is the director of education and outreach for Canada at the International Foundation of Employee Benefit Plans. She was the editor of Benefits Canada between October 2008 and September 2015.